Question

Multiple Choice Questions

1	Which of the following best defines the subject of economics?				Your answer
A	the art of making money	B	the study of choices that businesses make to maximize profit
C	the science that studies unemployment, inflation, and economic stability	D	the study of choices made to cope with scarcity

2	" Over the long term inflation is less a problem than unemployment" is an example of :				answer
A	A positive statement	B	A statement that could never be true
C	A statement that suffers from a logical error	D	A normative statement

3	Which of the following statements relates to the concept of efficiency?				Your answer
A	Being able to produce more of one good only by producing less of something else.	B	Using resources as effectively as possible
C	The absence of waste	D	All of the above.

4	After Rayan received a raise in his income, he began buying more Ice Cream Cones and fewer Popsicles. For Rayan Popsicles is:				Your answer
A	A joint product	B	A normal good
C	An inferior good	D	A complementary good with Ice Cream

5	Which of the following will shift the supply curve for textbook to the left:				Your answer
A	A decrease in the demand of substitutes in production	B	A decrease in taxes on textbook suppliers
C	An increase in printing costs	D	Government subsidies textbook suppliers

7	When a textile firm decides to produce more cotton fabric and less synthetic fabric, it is most directly answering the ---------- question.				Your answer
A	How	B	Why
C	For whom	D	What

8	When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?				Your answer
A	The substitution effect	B	An increase in the demand for Nike soccer balls
C	The income effect	D	The price effect

9	The production possibilities curve is the boundary between				Your answer
A	Those combinations of goods and services that can be produced and those that cannot	B	Those resources that are limited and those that are unlimited
C	Those combinations of goods and services that can be produced and those that can be consumed.	D	Those wants that are limited and those that are unlimited

10	Using the production possibilities curve model, unemployment is described as producing at a point				Your answer
A	on the exact middle of the PPCcurve	B	inside the PPC curve
C	on either end of the PPC curve	D	outside the PPC curve

Answer 1

1) d) is the answer.

Explanation:- Economic theory evolves from a few fundamental postulates about how individuals behave, struggle with the problem of scarcity, and choose be­tween a given set of alternatives.

2) d) is the answer

Explanation:- A value judgment is a subjective statement of opinion rather than a fact that can be tested by looking at the available evidence. Normative statements are subjective statements – i.e. they carry value judgments.

3) d) is the answer.

Explanation:- Economic efficiency is when all goods and factors of production in an economy are distributed or allocated to their most valuable uses and waste is eliminated or minimized.

4) c) is the answer

Explanation:- Inferior goods are a type of goods whose demand shows an inverse relationship with the consumer’s income. It means that the demand for the goods decreases with an increase in the consumer’s income or expansion of the economy (which generally will raise the income of the population).

5) c) is the answer

Explanation:-  A decrease in supply can be thought of either as a shift to the left of the supply curve or as an upward shift of the supply curve. The shift to the left shows that, when supply decreases, firms produce and sell a smaller quantity at each price. The upward shift represents the fact that supply often decreases when the costs of production increase, so producers need to get a higher price than before in order to supply a given quantity of output.

7) d) is the answer

Explanation:- the firm is changing what it is producing.

8) a is the answer

Explanation:- The substitution may occur when a consumer replaces cheaper or moderately priced items with ones that are more expensive when a change in finances occurs.

9) c) is the answer

Explanation:- A production–possibility frontier (PPF), production possibility curve (PPC), or production possibility boundary (PPB), or Transformation curve/boundary/frontier is a curve which shows various combinations of the amounts of two goods which can be produced within the given resources and technology/a graphical representation showing all the possible options of output for two products that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time.

10) b) is the answer

Explanation:- Unemployment occurs when production is inside the production possibility cureve. Unemployemnt means resources that could be used for production are not being used.